Sherwin-Williams Announces Strong Third Quarter 2015 Results

Published on 2015-11-03. Author :
SpecialChem

CLEVELAND, OHIO -- The Sherwin-Williams Company announced its financial results for the third quarter and nine months ended September 30, 2015. Compared to the same periods in 2014, consolidated net sales increased $1.7 million, or 0.1%, to $3.15 billion in the quarter and increased $174.6 million, or 2.0%, to $8.73 billion in nine months due primarily to higher paint sales volume in our Paint Stores and Consumer Groups. Unfavorable currency translation rate changes decreased consolidated net sales 3.6% in the quarter and 3.2% in nine months.

Fig. 1: Sherwin-Williams

Diluted net income per common share in the quarter increased to $3.97 per share from $3.35 per share in 2014 and increased in nine months to $9.04 per share from $7.39 per share last year. The increases in third quarter and nine month diluted net income per common share were due primarily to improved operating results of the Paint Stores and Consumer Groups. Currency translation rate changes decreased diluted net income per common share by $.09 per share in the quarter and $.20 in nine months.

Net sales in the Paint Stores Group increased 2.9% to $2.09 billion in the quarter and increased 5.0% to $5.53 billion in nine months due primarily to higher architectural paint sales volume. Net sales from stores open for more than twelve calendar months increased 2.1% in the quarter and increased 3.9% in nine months over last year's comparable periods. Paint Stores Group segment profit increased $75.6 million to $507.4 million in the quarter from $431.8 million last year and increased $163.4 million to $1.12 billion in nine months from $954.0 million last year due primarily to higher paint sales volume.
Segment profit as a percent to net sales increased in the quarter to 24.3% from 21.3% last year and increased in nine months to 20.2% from 18.1% in 2014.

Net sales of the Consumer Group increased 9.4% to $421.6 million in the quarter and increased 10.4% to $1.26 billion in nine months due primarily to sales of HGTV HOME® by Sherwin-Williams paint to Lowe's stores. Segment profit increased to $88.3 million in the quarter from $79.0 million last year and increased to $257.9 million in nine months from $222.5 million last year due primarily to improved operating efficiencies. As a percent to net external sales, segment profit increased in the quarter to 20.9% from 20.5% last year and increased in nine months to 20.4% from 19.5% last year.

The Global Finishes Group's net sales stated in U.S. dollars decreased 9.3% to $486.1 million in the quarter and decreased 7.4% to $1.46 billion in nine months. Unfavorable currency translation rate changes decreased net sales by 8.3% in the quarter and 7.6% in nine months. Stated in U.S. dollars, segment profit decreased in the quarter to $55.1 million from $60.8 million last year due primarily to unfavorable currency translation rate changes and the gain on the early termination of a customer agreement in the third quarter 2014 partially offset by decreasing raw material costs. Nine month segment profit decreased to $151.3 million from $162.1 million last year due primarily to unfavorable currency translation rate changes. Third quarter and nine month 2014 segment profit included a $6.3 million gain on the early termination of a customer agreement. Unfavorable currency translation rate changes reduced segment profit $9.0 million in the quarter and $21.7 million in nine months. As a percent to net external sales, segment profit was flat at 11.3% in the quarter versus the third quarter 2014 and 10.4% in nine months compared to 10.3% in 2014.

The Latin America Coatings Group's net sales stated in U.S. dollars decreased 22.1% to $156.0 million in the quarter and decreased 16.3% to $472.3 million in nine months due primarily to unfavorable currency translation rate changes partially offset by selling price increases. Unfavorable currency translation rate changes decreased net sales by 23.6% in the quarter and 18.5% in nine months. Stated in U.S. dollars, segment profit decreased in the quarter to $2.1 million from $11.8 million last year and decreased in nine months to $15.7 million from $27.4 million last year due primarily to increasing raw material costs and unfavorable currency translation rate changes partially offset by selling price increases. Unfavorable currency translation rate changes decreased segment profit $5.0 million in the quarter and $10.6 million in nine months. As a percent to net external sales, segment profit decreased in the quarter to 1.4% from 5.9% last year and decreased in nine months to 3.3% from 4.9% last year.

The Company acquired 2.575 million shares of its common stock through open market purchases in the nine months ended September 30, 2015. The Company had remaining authorization at September 30, 2015 to purchase 2.650 million shares. On October 21, 2015, the Board of Directors authorized the Company to purchase an additional 10.000 million shares of the Company's stock for treasury purposes.

Commenting on the financial results, Christopher M. Connor, Chairman and Chief Executive Officer, said, “Our Paint Stores Group posted another quarter of positive operating results and architectural volume growth. Consumer Group improved its operating results through improved operating efficiencies. The HGTV HOME® by Sherwin-Williams paint program continues to drive sales improvements in Consumer Group. Our Global Finishes and Latin America Coatings Groups are managing through the negative effects of currency devaluation and weak end market demand in some geographies. In total, it is gratifying to report another quarter of sales increases and earnings per share growth.

“We continued to invest in our business by opening forty-five net new locations in the Paint Stores Group in the first nine months. During the quarter, we continued to buy shares of our stock, and we increased the dividend rate to $.67 from $.55 last year. Our balance sheet remains flexible and is positioned well for future acquisitions and other investments in our business. “For the fourth quarter, we anticipate our consolidated net sales will be up low single digits compared to last year's fourth quarter. At that anticipated sales level, we estimate diluted net income per common share in the fourth quarter of 2015 to be in the range of $1.70 to $1.95 per share compared to $1.37 per share earned in the fourth quarter of 2014. For the full year 2015, we expect consolidated net sales to increase by a low single digit percentage compared to full year 2014. With annual sales at that level, we are increasing our guidance that diluted net income per common share for 2015 to be in the range of $10.75 to $11.00 per share compared to $8.78 per share earned in 2014.”

About Sherwin-Williams

Founded in 1866, The Sherwin-Williams Company is one of the global leaders in the manufacture, development, distribution, and sale of coatings and related products to professional, industrial, commercial, and retail customers. The company manufactures products under well-known brands such as Sherwin-Williams®, HGTV HOME® by Sherwin-Williams,Dutch Boy®, Krylon®, Minwax®, Thompson's® Water Seal®, and many more. With global headquarters in Cleveland, Ohio, Sherwin-Williams® branded products are sold exclusively through a chain of more than 4,100 company-operated stores and facilities, while the company's other brands are sold through leading mass merchandisers, home centers, independent paint dealers, hardware stores, automotive retailers, and industrial distributors. The Sherwin-Williams Global Finishes Group distributes a wide range of products in more than 115 countries around the world. Source: Sherwin-Williams